Oct 26 2020
**Audio is not available of this week’s column**
Nebraska is an agricultural state, and we should be proud of that fact. One in four Nebraska jobs is tied to production agriculture, and our livestock industry alone is worth more than $12 billion each year.
While this means that Nebraskans can depend on thousands of good-paying agriculture jobs and a consistently low unemployment rate, it also leaves us more exposed to market volatility. This is why I introduced the Cattle Market Transparency Act of 2020 in late September.
My bill has two main goals. First, it would ensure that the cattle industry maintains the necessary level of cash sales on a region-by-region basis. The industry is shifting away from on-the-spot cash trades and toward longer-term sales agreements, such as formula arrangements, where cattle are committed in advance and the price is determined by the publicly reported value of similar cattle sales — usually cash prices.
The cash market is crucial to determining accurate price information along the supply chain. In fact, without the price discovery that comes from in-person transactions, formula sales wouldn’t be possible.
At the same time, some states are more reliant on formula sales than others. The Texas/Oklahoma/New Mexico region, for example, uses cash sales for only about 5-10% of all transactions, but in Nebraska and Iowa, they account for almost half. My bill would give producers in different regions space to do what’s best for them while still guaranteeing the minimum level of cash sales that’s necessary for price discovery.
Second, it would equip ranchers across the country with more information about contracts in the market. To achieve this, it would ask USDA to create and maintain a library of marketing contracts between packers and producers and require packers to report this information to the department.
USDA would then publish this valuable information, including base price determinations, premiums, and discounts. The bill is careful to ensure each party’s identity is kept confidential, but knowing what contracts exist in the market is important, and this information could help producers negotiate better contracts in the future.
The Cattle Market Transparency Act of 2020 would also require packers to report the number of cattle they have scheduled to be delivered for slaughter each day for the next 14 days. This requirement already exists in the swine industry, and their example shows that this will help producers better project packers’ future needs.
The Cattle Market Transparency Act has already been endorsed by Nebraska Cattlemen and similar organizations in 16 other states, from Oregon to Wisconsin to Georgia. They sent a letter to my colleagues on the Senate Agriculture Committee, Chairman Pat Roberts and Ranking Member Debbie Stabenow, that said this bill would make their jobs easier and help to put them on a more even playing field with packers.
Not all producers are the same, but there is at least one thing they all have in common: They do better when they have more information at their disposal. The Cattle Market Transparency Act would equip them with exactly that.
Thank you for participating in the democratic process. I look forward to visiting with you again next week.